Argentina's central bank unveils new measures to reduce debt

Source: Xinhua| 2018-10-13 14:41:12|Editor: Shi Yinglun
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BUENOS AIRES, Oct. 12 (Xinhua) -- Argentina's Central Bank (BCRA) unveiled new measures on Friday to reduce its Argentine peso-denominated short-term debt, known as Lebac.

The bank said in a statement it would offer a maximum of 150 billion pesos (4.050 billion U.S. dollars) in Lebacs on Tuesday to offset an estimated 231 billion pesos (6.243 billion dollars) in notes set to expire on the same day.

The auction will be directed exclusively toward non-banking institutions, while banks will be offered with seven-day "liquidity notes," known as Leliq, with an average interest rate of 72 percent.

"At the same time, the Finance Ministry will offer treasury bills (Letes) which work as an alternative to investment in pesos for everyone in the financial market," the BCRA said.

The measures by the BCRA are meant to reduce the country's financial obligations, which are part of a 57.1-billion-dollar financing agreement between the Argentine government and the International Monetary Fund (IMF).

The BCRA said in the statement that its current stock of Lebac debt has been reduced to 340 billion pesos (9.189 billion dollars) from 1 trillion pesos (27 billion dollars) in June.

Since the beginning of October, the BCRA has adopted a series of measures in order to create a greater demand and relax the exchange rate.

Among these measures is a change in the instrument of the monetary policy rate, which is now defined daily at levels of over 70 percent, the highest rate in the world.

Besides a high benchmark rate, the BCRA has opted for a gradual increase in bank reserves to absorb liquidity and a zero growth of the monetary base until 2019.

Since April, Argentina has faced a vulnerable economic and financial situation, as the U.S. dollar keeps rising and has appreciated at least 100 percent against the Argentine peso so far this year.